The US Department of Veterans Affairs (VA) offers eligible veterans a Federal Mortgage Guarantee to purchase a home. Eligibility for a VA home loans is similar to a traditional mortgage loan in that a favorable credit score and certain levels of income are required when applied by a lender. While a VA mortgage loan is very similar to a conventional or federal Housing Administration (FHA) loan, a VA mortgage has some important differences. For example, a VA home loans is guaranteed up to $ 417,000. In addition, veterans are able to guarantee the loan usually without a down payment, and there will be a slightly more favorable interest rate and conditions than traditional mortgages.
- Things you need
- Form VA 26-1880
- Form DD-214
Payment of credit reports and home appraisal fees
Apply for a VA eligibility certificate from the Department of Veterans Affairs to establish your Veteran qualification status for a VA mortgage. You can request an eligibility certificate by traditional mail or the VA web page. For an eligibility application by mail, you must complete Form VA 26-1880 with the following VA office:
- VA Eligibility Center
- PO Box 20729
- Winston-Salem, NC 27120
To file eligibility through the VA home loans web page, go to https://vip.vba.va.gov and register as a user. Registration through the webpage that requires you to enter credentials to determine veteran status. The information you enter on your registration or form 26-1880 VA must match the information in your DD-214 or your active service record for the service. Once you establish your username and password, login to the system and claim your eligibility certificate.
Choose the house you want to finance your VA mortgage loan. Contact the seller, or ask your real estate agent to contact the seller, and discuss the indications needed to purchase the house. If you decide to sign a purchase contract, it will be on the condition that the VA approves the loan.
Submit a mortgage application to your lender. In turn, your lender attaches additional credit reports and financial information to carry out the application. In addition, the lender will ask the VA home loans to assess your chosen property to establish the loan amount. Unless the lender agrees to pay for the property assessment and credit report, you will be responsible for those expenses.
Meet lender standards for credit worthiness and income level to increase your chances of loan approval. Your lender will be in communication with you during the application and approval process to work on your final loan approval.
Close on your loan. At closing, once all related documents, mortgage notes, and terms are discussed and finalized, you will be allowed to take possession of the house.
How to qualify for mortgages assumable
Some mortgages are assumable, meaning that if you want to buy a home with an assumable loan, you can acquire the existing loan at the existing loan rate and the remaining conditions rather than starting the loan process from scratch. Assuming an existing mortgage loan saves buyers thousands of dollars in costs that would be required to secure a new mortgage close. An existing mortgage can also give the buyer the opportunity to obtain a lower interest rate than is currently available in the loan market. In order to qualify for a hypothec able mortgage, you must meet the current eligibility criteria for the lender who holds the hypothec able mortgage.
- Things you need
- Monthly gross income
- List of monthly debt
Ask the home seller to get the following information from the existing mortgage lender: the ratio of back-end debt before and required to qualify for the loan, the credit rating required to qualify for the loan, and a package of loan hypothesis.
Make sure your debt ratio is within qualifying range for the mortgage. Front End Debt Ratio is the percentage of your gross monthly income allowed for the payment of the house. Back-end indebtedness ratio is the total amount of your fixed monthly debt, including the home loan, divided by your gross monthly income.
Pull your credit report with scores from all three credit bureaus and make sure your credit score meets the requirements to assume the loan. If you discover errors on your credit report, file disputes for items with the credit bureau (s) that contains the errors.
Review the support package and complete the loan application. Gather copies of all the supporting documents needed for the loan hypothesis application. Common elements requested include the last two months of pay stubs, the last two years of tax returns and copies of driver’s license and social security card.
Send the application and paperwork to support the mortgage lender as well as any upfront fees required. At a minimum, lenders usually charge a fee for a credit check.
Work directly with the lender to explain any problems with your credit or debt. When the loan is made through the underwriting process, the lender will set a date for closing and provide you with a place where the company will close the loan.